In an hour-long chat on rediff.com on Thursday, Rahul Goel, CEO, Personalfn.com, answered readers' queries on tax planning, invetsment, mutual funds etc. As questions poured in from every corner, many queries went unanswered.  

Today, he responds to a few of them:

kayshik asked, HIn rahul is ULIPs investment anyway better than Mutual funds , They claim that SEc 10 ( 10 D ) tax relief is a unique feature pls give some light

Rahul Goel answers, While technically this may be true, it is not the entire truth! The fact is that proceeds from insurance are tax-free. But then so are the proceeds from assets like equity and equity funds (as long as you have held them for more than twelve months). So, this is not really a valid selling point, in my view. Having said that, one needs to also evaluate the cost benefit of investing in ULIPs; our research, at www.personalfn.com, indicates that one needs to be invested for atleast about 10 years, before it starts to compare favourably with well managed mutual funds.

NAGESH asked, hi.iam nag.i have plan to take home in delhi costing appr.25-30lacs.in the next 3years. i have started investing 15k p.m.in sbi magnum global fund from feb 2007. to accumulate for down payment and remaining loan from bank.Is it good thing investing in only one mf or more mfs required to face/avoiod risk.pls advice me

Rahul Goel answers, Well, since you have a maximum tenure of three years, you should not have all your money in equities. You should add some bonds/debt funds to reduce the 'riskiness' of your portfolio. Also, have about 4/5 schemes for the equity part of the portfolio. And in my view, have diversified equity funds; avoid thematic funds.   

ashutoshswain asked, Now which fund gives more return. kindky suggest me.

Rahul Goel answers, Mutual funds are of different types; some invest in debt, other in equities and some in both. Now you also get funds which invest in other assets like gold. Each type will have a different risk return profile; while the equity funds will tend to be risky, they will also offer an attractive return. In our view, if you are invested for atleast three years in well managed diversified equity funds, you should be able to earn about 15% pa. Of course, this return will not be steady; it will be lumpy and there is every possibility that you could be 'negative' for some period of time. Debt funds, of the short term type. on the other hand, offer a lot more steady return as compared to equity funds.

basudev asked, kindly let me know the best diversified mutual funds expected to do well over 3-5 yrear horizon. i can invest 1.5 lac per annum

Rahul Goel answers, The best way to go about identifying funds is to understand your risk appetite and return expectation first, and then match it to the funds available out there. Your financial planner should be able to assist you with this.

TSSSrinivas asked, I am 35 years old. which fund do you suggest me for a period of 5 years. my annual package is about 5 lacs. Thank you

Rahul Goel answers, You have already identified mutual funds as an investment avenue for yourself. And since your time to investment is 5-years, it is likely, given that you have risk appetite, that a predominantly equity fund portfolio will suit you best. You can also consider adding some lesser risky funds like balanced funds; in current times locking in a small portion of the money in FMPs too may be a good idea. Finally, from a diversification perspective, invest some money in gold (but be careful when buying gold from your bank!).  

sachins asked,  have invetsed about 4 lacs in mutual fnd since last 3 years and have return of 1 lac on the same...how much should one invest in MFs also what is the right time to exit?

Rahul Goel answers, How much you should invest in mutual funds would depend on how your overall assets are allocated? And also, in line with your long term objectives. The trade off between investing directly in shares or via mutual funds is something that depends on the amount of dedicated time you can spend on identifying investment opportunities in the stock markets. If you have little time, invest more in mutual funds.

AmitGoel asked, i want to invest good DEBT instruments ? Can you suggest me that.

Rahul Goel answers, In present times, one can consider FMPs. Also, if you wish to take on some risk for a possibly better return, take a look at well managed long term debt funds.

kush asked, Dear Sir, My age is 25 yrs. I save approx 30 - 40 K Per month... Can u please advice me where how and which are the avenus where i should invest .... Regards, Kush

Rahul Goel answers, The allocation will depend on why you wish to invest (the objective) and also the tenure for which you want to invest. So, if you are planning for your retirement, you can be aggressive (equity shares / equity funds will form a predominant portion of your asset allocation). But if you have a need six months from now, you need to be very conservative -- bank deposits / FMPs.

ashutoshswain asked, I recently invested in Frankline Growth fund by amount Rs 25000/-. I want know weather it is a good fund or not?

Rahul Goel answers, At Personalfn we do not encourage investors to put in money in NFOs (about 95% of the times). Sometimes the fund has a unique proposition which may suit some investors. But most of the times its a gimmick to mobilise more assets.

shaheen asked, is it true that investing in templeton SIP with an amount as low as 2000 per month for five years will lead to a value creation of about 15 lakhs? i read it sometime back in rediff website.

Rahul Goel answers, It seems unlikely. If you were to invest the money in instruments which can yield 15%, even then the maturity value will be a lot less than Rs 2 lakhs. To reach Rs 15 lakhs, it will take you about 16 years.  

mathew asked, HI Rahul, I am an NRI Based in Ireland. I am 39 Years old. I have invested in property worth around 1 crore in india. I want to invest in ICICI [Get Quote] Prudential insurance, which was recomended by my friend. he told me that the returns are 35% per year. I want to retiar in 4 years time. What do you suggest?

Rahul Goel answers, I think it is unreasonable to expect a return of 35% per annum. While this may have been true in recent years, it surely is too ambitious to expect the same return in the future. A 15% return is a lot more realistic � but even this will depend on whether the fund/ULIP is well managed or not.  

shashwat2429 asked, dear rahul my i am married and soon will be having a kid in nov. my income is 35k per month. i have invested 40k per annum in lic and 60k per annum in ppf. also in vested rs 2000 in sip of franklin mutualfunds. plz guide me further as to whether i should invest more and where to invest if i look for a return yearly. also invested good amount in fds

Rahul Goel answers, Now that you have already committed monies to LIC [Get Quote] and PPF, the traditional avenues, and also FDs, you must consider increasing your portfolio returns by taking some risk. You can add some monies to equity funds, but very gradually. Understand that you may lose money in the near term; but over the long term, well managed funds will help you improve overall returns. Also, with respect to FDs compare the returns on a post tax basis with the FMPs; if you are in the highest tax bracket, then FMPs for sure are a better option.

shikha asked, HI, I want to invest IN Sip plan, and I have bought SBI [Get Quote] iNFRASTRUCTURE FUND AND has taken METLIFE PLAN. what do u think and how can I save more money

Rahul Goel answers, At Personalfn, the financial planning initiative I represent, we do not recommend sector funds. We think that over the long term the risk return trade off simply does not work. I suggest you go in for well managed diversified equity funds.  

kaul asked, sir what is the meaning of sectorial funds

Rahul Goel answers, Sectoral funds are those funds where the fund manager's mandate is limited to investing in a particular sector. For example Technology funds can invest only in companies in the IT sector. What these funds do is effectively take the flexibility of investing from the fund manager; so if the sector is not likely to do well, the fund manager will still have to remain invested. In a diversified fund however, the fund manager is free to switch to other sectors.

Dr. Kumar asked, hi rahul, i want to know that besides investing via SIP, is the time right to invest via lumpsum also in equity mutual funds with the sensex so high?

Rahul Goel answers, Whether to invest a lump sum or not will depend on your risk appetite. The reason is that from our perspective, a 3-5 year investment scenario is still attractive. So, basically equities are still attractive; but what we do not know what the markets will do in the near term. So, if you can bear a near term loss, go for lump sum; if you wish to dilute the risk, go in for Systematic Transfer Plans. In either case, select the schemes very carefully.

Chat with Rahul Goel, next Thursday